Europe South Asia Asia Pacific Americas Middle East Africa BBC Homepage World Service Education

Front Page



UK Politics







Talking Point

In Depth

On Air

Low Graphics

Wednesday, May 5, 1999 Published at 14:06 GMT 15:06 UK

Business: The Company File

Digital television wars

BskyB is determined to win at any cost

The battle for control of the future of television is hotting up.

Digital television promises to transform our viewing habits - bringing a plethora of new channels and interactive services to our homes.

The UK's leading media moguls are fighting each other tooth and nail as they search for digital supremacy.

BBC News Online attempt to bring the television revolution into focus.

What is digital television?

Digital television was launched in the UK seven months ago with a blaze of publicity.

[ image: ONdigital is fighting back]
ONdigital is fighting back
Pictures can now be sent via digital signals - avoiding the interference that has normally been associated with traditional analogue signals and improving the quality of pictures.

Much more information can also be beamed via these digital signals - which allows broadcasters to increase the number of channels on offer. New services such as home shopping, Internet access and banking will also be introduced.

These digital signals can be delivered in the same way as ordinary television - by cable, by satellite, or through an ordinary aerial.

Boxing clever

The computer signals then have to be decoded via a special box. Customers can either buy a stand alone box or one of the new generation of television sets which will have the decoders already built in.

The battle for the digital viewers centres on the different ways in which customers can receive these new signals:

Via a satellite dish

[ image: Free satellite installation helped launch BSkyB]
Free satellite installation helped launch BSkyB
BSkyB launched its digital satellite service last October, with 150 channels - including 40 channels of pay-per-view films and 40 of music. Customers have to have a satellite dish. Then they can simply plug in their set top box to their dish and receive pictures. However, to receive BSkyB's full service, including new interactive services, they also require a phone line which transfers data from the television screen.

Via a normal television aerial

ONdigital, a joint venture between ITV companies Granada and Carlton, was launched last December. Customers do not need a satellite dish - but can plug in the set top box to the TV aerial. Up to thirty channels are available via the service. At launch less than three quarters of the population could receive the service, although new transmitters are being installed.

Via television cables

Cable companies, lead by Cable & Wireless Communications, plans to launch a digital service later this year. CWC is investing £60m into the new service and following trials over the summer it will be introduced in London and Manchester in October. However, only customers that have cables laid near their house can use the service.

The costs involved

At the moment set top boxes cost around £200 if you agree to subscribe to BSkyB and ONdigital channels. The cost rises to £400 if you choose not to subscribe to these channels.

BSkyB has already announced it plans to give away these boxes to new customers and ONdigital is expected to follow suit.

Meanwhile television sets with built in decoders cost up to £1200 - although ONDigital has announced plans to cut the cost to £500.

Customers still have to pay a monthly subscription for digital channels which starts at £6.99 for BSkyB and £7.99 for ONdigital. However, costs rise sharply if customers want to receive the sports or film channels and BSkyB plans to raise its subscription fees to cover the cost of giving set top boxes away.

BSkyB is charging a £40 installation fee for the digital service. If customers do not have a satellite dish already they will also have to have one installed.

Who is winning the war?

It is too early to say who will emerge as the winner in the digital television war.

BSkyB has signed up more than half a million digital customers and claims it will have a million by October. However a majority of these subscribers were BSkyB customers already and have simply switched from its pre-digital service.

ONdigital meanwhile has signed up around 130,000 new subscribers - although it has been around for a shorter time.

Cable companies will also pose a serious threat to the two existing operators. Fibre optic cables can carry huge amounts of information - allowing faster access to the Internet and other interactive services.

The intense battle is likely to be good for consumers - with prices coming down as competition intensifies.

However, those companies involved in digital television are taking a huge gamble - investing hundreds of millions of pounds in a business that will not be profitable for some time.

There is all to play for. Digital television will ultimately replace all existing television signals, and digital systems could become the main channel for the Internet.

But the government has yet to announce a date when analogue television will be switched off, and the ensuing battle could prove costly.

Advanced options | Search tips

Back to top | BBC News Home | BBC Homepage | ©

The Company File Contents

Relevant Stories

05 May 99 | The Company File
Digital TV price war looms

15 Nov 98 | The Company File
First shots in Digital TV war

28 Sep 98 | Sci/Tech
Digital TV line-ups unveiled

28 Jul 98 | Entertainment
Unscrambling digital TV

Internet Links

Cable & Wireless Communications



The BBC is not responsible for the content of external internet sites.

In this section

Microsoft trial mediator welcomed

Vodafone takeover battle heats up

Christmas turkey strike vote

NatWest bid timetable frozen

France faces EU action over electricity

Pace enters US cable heartland

Mannesmann fights back

Storehouse splits up Mothercare and Bhs

The rapid rise of Vodafone

The hidden shopping bills

Europe's top net stock

Safeway faces cash demand probe

Mitchell intervenes to help shipyard

New factory creates 500 jobs

Drugs company announces 300 jobs

BT speeds internet access

ICL creates 1,000 UK jobs

National Power splits in two

NTT to slash workforce

Scoot links up with Vivendi

New freedom for Post Office

Insolvent firms to get breathing space

Airtours profits jump 12%

Freeserve shares surge

LVMH buys UK auction house

Rover - a car firm's troubles